The Yaojiang Valley (YJV) on the southern Hangzhou Bay Plain, eastern China, was home to Neolithic cultures that date back to 8 ka. Reconstructions of ancient human cultures on the coastal plain in response to sea-level and hydroclimate changes have been well documented. However, centennial-resolution geological records are still lacking. Here, we present a combined approach of environmental (mineral) magnetism, geochemistry and diffuse reflectance spectroscopy (DRS) on a sediment core (YJ1503) in YJV to decipher the centennial hydroclimate oscillations of the coastal plain since early Holocene. Our results show that ferrimagnetic greigite and paramagnetic pyrite bearing layers correspond to periods of reducing condition that were caused by a higher water table while the presence of antiferromagnetic hematite/goethite corresponds to drier periods favorable for soil formation. Centennial scale fluctuations of magnetic mineralogy around the 8.2 ka cooling event and 7.5–6.6 cal ka BP reflect frequent and unstable environments, with limited Neolithic occupation. A strong drought event occurred around 6.0 cal ka BP, which was preceded by an extensive marine inundation event in the study area. This inundation event interrupted rice farming. Our study indicates that magnetic mineralogy can be used to reconstruct high-resolution hydrological processes in coastal plain and floodplain environments. These results are important to understand hydroclimate variation and Neolithic civilization response in environmentally sensitive areas.